Chart: Can You Claim It?

This chart comes to us via the Federal student loan lending agency, Sallie Mae, via Business Wire. The chart highlights three commonly available but oft misunderstood tax breaks for education expenses.

While the typical expense for college far exceeds the credits and deductions available, a few thousand bucks back from Uncle Same can certainly ease the bite. Note, too, that credits are available for non-traditional students, i.e. the worker who wants to augment a resume with job training. We’ll explore this more in our next Tip of the Week, but in the meantime be sure to work your way through the chart and related news release prior to filing your taxes to make sure you’re aware enough to file accordingly.

Chart: Tax Benefits Compared

Students and students’ families have three primary tax benefits available to them, all very well compared and contrasted in this handy chart brought to us by the good folks at the IRS. While last week we saw a breakdown of how to determine which benefit you may qualify for this will help fill you in on the details of each.

Families need to be aware of these benefits during tax time, take advantage of them, and plan accordingly for future years. An extra $2500 per year, per student can make a significant difference in affordability in many cases. Further, non-traditional and/or non degree-seeking students have an incredibly unique opportunity to redirect their tax dollars to personal betterment.

Put Your Taxes Back in Your Pocket

In our previous chart entries (here and here) we explored the primary tax breaks available to students and their families: the American Opportunity Tax Credit (AOTC), the Lifetime Learning Credit (LLC) and the deduction available for tuition and fees.

Now here’s a word of advice. In regards to taxes, anytime you see the word “credit” sit up and take note. A credit is a dollar-for-dollar discount from your tax bill for funds placed elsewhere. In other words, a credit is the opportunity to take money that you owe Uncle Sam or the state and redirect it for some other purpose. If that purpose is in line with something you already want to do it makes all the sense in the world to take advantage of it. Either way you must spend the money, so why not spend it to your benefit?

This brings us to a Tip of the Week: Put your taxes back in your pocket. In other words, don’t pay tuition and taxes if you don’t have to.